U.S. protectionism may already be having its effect on the yarn sector.
Buhler Quality Yarns Corp. was acquired by South Korea’s Samil Spinning Co. this week, and Samil said the move had a lot to do with securing sure entry to the U.S. market without facing major tariff barriers.
“As the U.S. takes aggressive moves under its protectionist policies there has been quite a growing need to secure a production facility in the country, which led Samil to acquire an American company,” Korea Joongang Daily reported the country’s investment promotion agency as saying.
Before the TPP was more or less off the table for the U.S., Samil had eyes on investments in Vietnam for its overseas production. But with things in the U.S. looking increasingly uncertain, and potentially unfavorable for foreign trade, the focus became clear for its next move.
Though the United States already has a free trade agreement with Korea, it follows the yarn forward rule of origin, which means only apparel with U.S.-made yarns can skirt the 32 percent duty on exports to the U.S. With Samil’s acquisition of Buhler, it will have its own U.S.-based operation and will be able to easily avoid those duties. Other Korean companies are expected to make similar moves.
“Even before the end of the TPP we were seeing a move towards Western Hemisphere production. The focus of the current administration towards America First has contributed to this trend,” said company CEO Marty Moran. “Samil wants to make sure they are strategically placed to participate.”
Buhler will still operate under its own name, and things are expected to be business as usual under the new ownership, according to Moran. What may be on deck for the future is additional product lines and a possible expansion at its Jefferson, Georgia, spinning facility. The deal was all cash and both parties agreed not to disclose any other details of the transaction. Final closing is expected by the end of April.